Beakins Corporation produces a single product. The standard cost card for the pr

Question

Beakins Corporation produces a single product. The standard cost card for the product follows:

Direct materials (4 yards × $5 per yard)

$20

Direct labor (1.5 hours × $10 per hour)

$15

Variable manufacturing overhead (1.5 hours × $4 per hour)

$6

During a recent period the company produced 1,200 units of product. Various costs associated with the production of these units are given below:

Direct Materials purchased (6,000 yards)

$28,000

Direct Materials used in production

5,000

Yards

Direct labor cost incurred (2,100 hours)

$17,850

Variable manufacturing overhead cost incurred

$10,080

The company records all variances at the earliest possible point in time. Variable manufacturing overhead costs are applied to products on the basis of standard direct labor-hours.

The materials price variance for the period is:

$1,250 F

$1,500 F

$1,250 U

$1,500 U

Direct materials (4 yards × $5 per yard)

$20

Direct labor (1.5 hours × $10 per hour)

$15

Variable manufacturing overhead (1.5 hours × $4 per hour)

$6

Explanation / Answer

i have doubt about question. because answer not given in option. please recheck original question. especially figures. based on this question answer will be: $2,000 Favourable.

see the working

Material Price variance = Actual Quantity purchased* (Actual Price - Standard Price) Material Price variance = 6,000 * (($28,000/6,000) - $5) Material Price variance = $2,000 F

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